World Review of Business Research

Vol. 7. No. 1. March 2017 Issue. Pp. 32 – 44

Impact of Corporate Social Responsibility on Consumer Buying Behavior in Egypt

Nevine Eshra1 and Noha Beshir2

To survive today’s competition, business organizations must not only take care of the quality of life of their employees and their families, but also take care of their community and society at large. Corporations give more attention to their social responsibility through their four dimensions, economic, legal, ethical, and philanthropic. Many studies have been conducted in CSR taking into consideration corporations’ point of view, however, limited studies considered CSR from consumer's perspective. This study will enhance the literature about the theory of consumer perception of CSR and its impact on consumer buying behavior. Practically speaking, this study will apply the impact of CSR on consumer’s buying behavior in Egypt. The results showed that Egyptian consumers are adequately aware of CSR concept, but, at the same time, all CSR elements have insignificant relation to consumer behavior. This means that the Egyptian consumers do not think about any of CSR elements when they take their buying decision.

Field of Research: Marketing

1. Introduction Corporate social responsibility (CSR) is increasingly considered vital for organizational success and sustainable growth across industries, especially in view of corporations operating in an environment with multiple stakeholder interests. Investment in CSR should not be seen as an expense, but rather an allocation of resources to strengthen relationships with stakeholders and a source of gaining competitive advantage. CSR has

been evolving as early as the 1930s (Carroll 1979). It can be defined as treating the stakeholders of the firm ethically or in a responsible manner. CSR is a concept whereby organizations consider the interests of society by taking responsibility for the impact of their activities on stakeholders as well as the environment. This obligation extends beyond the statutory obligation to comply with legislation and makes sure organizations voluntarily taking further steps to improve the quality of life of employees and their families as well as the local community and society at large. Carroll (1991) suggests that CSR should be divided into four responsibility levels: economic, legal, ethical and philanthropic responsibilities. Economic responsibility refers to the profitability of the organization, while legal responsibility is complying with laws and regulation. As for the ethical perspective, the organizations should go beyond the law and contribute to social wellbeing. Philanthropic responsibility refers to voluntary giving and servicing the society. Throughout time, entities' environmental responsibility has emerged as the most discussed issue in today’s CSR literature. Carroll’s definition does not specify

1 Dr.Nevine Ibrahim Abd El-Salam Eshra, Marketing & International Business Department, Arab Academy

for Science, Technology & Maritime Transportation, Alexandria, Egypt. E-mail: nevineeshra@hotmail.com 2 Dr.Noha Beshir Mohamed Beshir, Marketing & International Business Department, Arab Academy for Science, Technology & Maritime Transportation, Alexandria, Egypt. E-mail: nohabeshir@yahoo.com

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the environment as a distinct domain, just as Dahlsrud (2006) places it, but rather as a social issue among practices conducted in a philanthropic manner. The definition of CSR for this study is based on Carroll’s pyramid of CSR. Today, consumers are more aware of the corporations' responsibility through better education and through the influence of the media. It may no longer be accepted for business organizations to ignore CSR. The role of businesses in society does no longer focus only on creating wealth, but rather on acting responsibly towards stakeholders (Harrison & Freeman, 1999).Some researchers found that consumers generally have positive responses towards companies that have social, responsible activities (Saleh et al. 2015). At the same time, there is still a lack of consensus over consumer behavior towards CSR activities (Rahim et al. 2011; Safi & Ramay 2013, Saleh et al. 2015), so this study investigates whether consumers’ purchase decision is affected by CSR activities or they are not put into consideration when making such a decision. As the education level increases, consumers become aware of the need for prosaically corporate behavior. A lot of work has been done in Western countries to identify an organization's behavior regarding consumer purchasing decisions. However, limited studies examine the relationship between CSR and consumer buying behavior, especially in emerging markets such as Egypt. This research contributes to the limited CSR studies that examine its effect on consumer buying behavior (Rahim et al. 2011; Min et al. 2012; Safi & Ramay, 2013). This research also examines to what extent the Egyptian consumers are aware of CSR?’ and ‘what is the impact of CSR elements on Egyptian consumers behavior?’ Results of this study indicate that Egyptian consumers are actually aware of the concept of CSR that goes with the study of Kolkailah et al. (2012). On the other hand, all CSR elements have insignificant relation to consumer behavior while Rahim et al. (2011) in Malaysia and Safi and Ramay (2013) in Pakistan indicate a significant relation. In addition, Min et al. (2012) in Malaysia find that there is no relation between economic and legal responsibility and consumer behavior. The rest of this study is structured as follows: the next sections discuss the literature review and the methodology. The discussion and analysis are presented in the fifth section and followed by conclusions in the final section.

2. Literature Review 2.1 Corporate Social Responsibility

Many scholars and researchers have approached the concept of corporate social responsibility from several perspectives. Initially, the concept was mainly associated with economic aspects, understood as the organization’s obligation to maximize shareholder’s value. Corporate social responsibility depends on the stakeholder theory which states that the main purpose of any business is maximizing value for stakeholders (Kiran & Sharma 2011). For example, in 1999, Phillip Morris made $75 million in charitable contributions and then launched a $100 million campaign to publicize these charitable contributions to increase their visibility in the society (Vlachos et al. 2009). Another research flow appears relating the concept of marketing activities with a social dimension in areas such as environment protection, community development, resource conservation and philanthropic giving (Liu & Zhou, 2009). According to Wood (1991), the basic idea of corporate social responsibility is that business and society are interwoven

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rather than separate entities’. Organizations can improve their corporate prestige by fulfilling their CSR because its’ activities can strengthen organizations’ prestige, promote consumers’ impression of them, increase trust between organizations and consumers, and influence consumers’ purchasing behavior (Nochai & Nochai 2014). CSR should be understood as a broad concept. Carroll’s (1999) framework is significant as the most widely accepted and used framework to explain the construct. Many definitions have been given for CSR, but the most common and most conclusive definition is Carroll's (1979) definition that identified four main responsibilities organizations should fulfill: economic, legal, ethical and discretionary that is also known as philanthropic responsibilities (Nochai & Nochai 2014; Saleh et al. 2015). Carroll (1999) terms the four dimensions of CSR as the four faces of corporate citizenship. Economic responsibilities pertain to the necessity for corporations to be profitable and grow. Legal responsibilities require organizations to operate within the boundaries of laws and national policies. Ethical responsibilities demand that organizations operate morally, fairly, justly and follow the norms placed on them by society. Philanthropic responsibilities oblige organizations to contribute financial and other resources for the welfare and betterment of the society and the national community. The impact of business activities on people’s quality of life leads to increase concerns about CSR. Nowadays, individuals consider CSR as a necessity and this belief has resulted in businesses which have been expected to define their roles in society in applying social, ethical, and legal responsibilities to their operations (Onlaor & Rotchanakitumnuai 2010). 2.2 Consumer Behavior towards Corporate Social Responsibility The behavior of a consumer who is socially conscious and looks for social change is known as social responsibility consumer behavior. Such consumer searches for more information or details pertaining to the products or services, purchase, and use and disposes of the products in a way that maximizes the advantages and minimizes any harmful effects on the society (Min et al. 2012; Mohr et al. 2001). Consumer behavior includes mental, physical and emotional activities which people do when they want to select, purchase, use or throw away the product or the service that fulfills their needs and demands (Vahdati et al. 2015). Understanding consumer buying behavior can support marketers become more familiar with their customers. In addition, it could be the root for marketers to develop applicable marketing strategies (Safi & Ramay, 2013). If marketers are aware of the consumer buying process, they know how consumers get information to buy and what factors influence their decision to buy (Vahdati et al. 2015). Many studies which have been conducted in developed countries to identify the influence of CSR on consumer behavior (Creyer & Ross 1997; Maignan 2001; Mohr et al. 2001). Creyer and Ross (1997) mention that consumers consider ethical behavior as an important indication through their purchase decisions. Maignan (2001) conducted studies in Germany and France, found that the respondents viewed legal concerns as the most significant responsibility, subsequently ethical, philanthropic and then economic responsibilities. Mohr et al. (2001) examine the impact of CSR knowledge on consumers' attitudes and purchase decisions as well as whether CSR affects consumers' decisions and why. Their findings indicate a significant relationship between CSR and behavior intention.

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On the other hand, there are some studies conducted in developing countries such as, Pakistan, Nigeria, Malaysia, Bangkok, Iran and Egypt (Yam 2013; Ali 2011; Kolkailah et al.2012; Nochai & Nochai 2014; Sarfaz 2014; Saleh et al. 2015; Vahdati et al. 2015). Ali (2011) and Sarfraz, (2014) study the influence of CSR on consumer intention. Ali (2011) finds that CSR has a significant positive influence on consumer purchase intentions while Sarfaz (2014) finds that consumers are satisfied with the CSR policies of the telecom companies, but CSR policies have no influence on the intention of the consumers. Kolkailah et al. (2012) reveal that consumers in Egypt are actually aware of the CSR concept and even tend to develop a positive attitude towards socially responsible companies and economic criteria are apparently still given a priority over the social criteria. Saleh et al. (2015) suggest that CSR, especially the social and economic activities, has a significant impact on word-of-mouth and both have a significant effect on sustainability when word-of-mouth mediates the relationship. Nsikan et al. (2015) demonstrate the influence of CSR on competitive advantage in the Nigerian telecommunication industry. The study concludes that CSR has a significant positive influence on competitive advantage and a statistically significant relationship exists between corporate social responsibility and corporate competitiveness. This can be accomplished by being environmentally conscious, awarding scholarship, funding charitable causes, adopting transparent recruitment practices, and striking a balance between work and family roles. Some studies find that consumer made buying decisions depending first on traditional criteria such as price, quality, and convenience and then based on damage or benefits to the society (Yam 2013; Gigauri 2012; Su et al. 2015). Nochai and Nochai (2014) find that the legal responsibility is the most important dimension that affects consumer buying behavior followed by ethical responsibility. Vahdati et al. (2015) indicate that consumers have a positive attitude towards CSR and it has a direct impact on their buying behavior. Other few studies have been conducted in Egypt and taken into consideration each dimension of CSR individually rather than its global construct. This research focuses on exploring whether Egyptian consumers consider CSR initiatives before making any purchasing decisions. The study also tries to find out the dimensions of CSR which have the significant effect on consumers buying behavior based on Carroll’s CSR pyramid. 2.3 Independent Variables In this study, the independent variables were developed from Carroll’s CSR pyramid, indicating the economic, legal, ethical, and philanthropic responsibilities. 2.3.1 Economic Responsibility According to Carroll (1991), economic responsibility is the basic unit in a corporation to carry the responsibility that corporations should provide goods and services that society wants at reasonable prices taking into consideration making profits and increasing the value for their shareholders. According to Onlaor and Rotchanakitumnuai (2010), the price is the most important factor that affects consumer satisfaction and buying behavior. Consumers feel unsatisfied when the prices of goods or services are high, which in turn, influence the consumers’ buying behavior towards the company. Consequently, the first research hypothesis is:

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H1: Economic Responsibility has a significant effect on consumer buying behavior

2.3.2 Legal Responsibility The society expects from corporations to work within the framework of laws and regulations while carrying out their business operations. The purpose of the legal responsibility is to ensure that the activities and performances of the companies are acceptable by the stakeholders. Furthermore, a successful corporation should be recognized as one that fulfills its legal obligations. The consumer, one of the stakeholders, is expecting the companies to meet the legal requirement for product safety, quality, and accurate information and so on. Failing to comply with these aspects, company performance will be adversely affected (Carroll & Shabana 2010). Hence, the second research hypothesis is: H2: Legal Responsibility has a significant effect on consumer buying behavior

2.3.3 Ethical Responsibility Ethical responsibility refers to those standards, norms, or expectations that are related to what consumers, employees, shareholders and the community regard as fair and just or protect the stakeholder’s moral right and they extend beyond the legal responsibility (Carroll 1979).Balancing economic, legal and ethical responsibilities are important. If the corporation does something that is appropriately economic and legal, it must also be appropriately ethical. Creyer and Ross (1997) find that consumers are willing to pay higher price for products with ethical companies as they build trust with their consumers. Thus, the third research hypothesis is: H3: Ethical Responsibility has a significant effect on consumer buying behavior

2.3.4 Philanthropic Responsibility Society desires corporations to contribute their money, facilities and employee time to humanitarian programs or purposes including arts, education, or communities, all of which refer to philanthropic responsibility. According to Carroll (1991), it is important for managers and employees to participate in voluntary and charitable activities within their local communities, especially in projects that enhance a community's quality of life. The distinguishing characteristic between philanthropic and ethical responsibilities is that philanthropic responsibilities are not viewed in an ethical or moral sense. Philanthropy is located at the most voluntary and discretionary dimension of corporate responsibility and has not always been linked to profits or the ethical culture of the firm (Ferrell 2004). According to Rahim et al. (2011), philanthropy will not directly gain the economic return, but it can help create and build up the image or reputation of the companies and enhance the firm’s long-term competitive position in the market. In addition, it also helps increase employee loyalty and customer satisfaction. That means that engaging in philanthropic activities create win-win situations for both the business sector and the societies around them. Therefore, the fourth research hypothesis is: H4: Philanthropic Responsibility has a significant effect on consumer buying behavior

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3. Conceptual Framework Based on the literature review, research hypotheses, and research objective, the conceptual framework of this study is developed and shown in figure 1.

Figure 1: Conceptual Framework

Independent Variables Dependent Variable

CSR Dimensions

4. Methodology This research is a quantitative research using a questionnaire survey. The questionnaire is proven to have high reliability and consistency. This survey instrument allows the researcher to examine the impact of CSR on consumers’ buying behavior. Simple random sample was carried out to collect the view of consumers in Egypt. Egypt has a population that exceeds 90 million people, due to time constraints, a total of 140 consumers were selected as our respondents and questionnaires were distributed to consumers in Alexandria only during March 2016. Roscoe (1975) recommends that sample sizes larger than 30 and less than 500 are appropriate for most studies. The questionnaire is adapted from Rahim et al. (2011) and it consists of three major sections. Section A gathers information on consumers' awareness of CSR. This section covers some general questions to obtain the respondent's understanding of the term CSR, which indicates the ability of the respondent to complete the rest of the questionnaire. The respondents who indicated having no knowledge of CSR were not included in the data analysis. Section B covers statements on consumer behavior (dependent variable) towards CSR activities engaged by the business organizations. The statements were divided into four subsections based on Carroll's pyramid of CSR, which include economic, legal, ethical and philanthropic responsibilities with eight measurement items again adapted from Rahim et al. (2011).

Economic

Responsibility

Legal

Responsibility

Ethical

Responsibility

Philanthropic

Responsibility

Consumer’s

Buying

Behavior

H 1

H2

H3

H4

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Section C gathers demographic information of the respondents such as gender, age, education level and monthly income level. Section A (consumers’ awareness)and Section C(demographic information)were designed using nominal scales, whereas Section B(consumer behavior) was designed using a five-point Likert scale ranging from “1” for "strongly disagree" to "5" for "strongly agree". A pre-test was conducted to refine the survey questions and a questionnaire was given to 30 respondents in this stage. Cronbach's Alpha coefficient was used to evaluate the reliability of the measures. The Cronbach's Alpha coefficient for the four independent variables and one dependent variable was 0.736. According to the rule of thumb of Cronbach's Alpha coefficient (Zikmund 2003), the reliability of data set is acceptable if Cronbach's Alpha is above 0.7. The data obtained were analyzed using the SPSS software, where descriptive and multiple linear regression statistics were used to analyze the data. Descriptive statistics were used to analyze the data in Sections A and C of the questionnaire, whereas multiple linear regressions were used to analyze the data in Section B.

5. Discussion and Analysis The respondents of this study include 60.7% females and 39.3% males. Age of respondents was divided into five categories: from 16 to less than 25, from 25 to less than 35, from 35 to less than 45, from 45 to less than 55, and above 55 years old. The majority of respondents were in the third category between 35 and less than 45 (53.3%). Monthly income was divided into four categories: from 1000 to less than 3000, from 3000 to less than 5000, from 5000 to less than 10000, and more than 10000, and most of the respondents were in last category (42.2%). The findings of general awareness of CSR in Egypt in this study are shown in Table 1. According to 140 questionnaires returned, 32.1% of the respondents said that they understand the concept of CSR properly, while 35.7% respondents indicated that they moderately understand the concept of CSR, and 28.6% indicated that they do not understand CSR well. On the other side,3.6% of the respondents mentioned that they do not understand anything about CSR and because of that, they have been excluded from the analysis. These results indicate that the majority of the research sample had good understanding of the concept of CSR, which corresponds with the study of Kolkailah et al. (2012).

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Table 1: Consumer general awareness of CSR

Knowledge level on CSR Percent

well understood 32.1

moderately understood 35.7

little understood 28.6

not at all 3.6

Definition of CSR Frequency

Maximizing shareholder value(Economic) 64

Complying with law and regulations(Legal) 100

Contribute to charitable organizations(Philanthropic) 127

Participate in community service(Ethical) 111

Keep upholding human rights and minimizing discrimination (Ethical) 116

CSR activities that the organization should be involved in Frequency

Donation (Philanthropic) 123

Community work(Ethical) 81

Sponsor education(Philanthropic) 48

Protect environment and don’t harm it(Ethical) 86

Not wasting natural resources(Ethical) 76

Sponsor sport(Philanthropic) 21

Maximize shareholder value(Economic) 82

Produce safe products(Legal) 114

According to the statement that is related to the definition of CSR, findings show that contribution of charitable organization has obtained the highest frequency (127 counts), followed by keep upholding human rights and minimizing discrimination (116 counts) followed very closely by participating in community service (111 counts), and complying with law and regulations (100 counts), while maximizing shareholder value ranked the lowest (64 counts).These findings indicate that from consumers’ point of view organizations have to fund charitable activities (philanthropic responsibility)rather than maximizing shareholder value(economic responsibility).The Egyptian pyramid of CSR is different from that of Carroll’s classical pyramid. According to Carroll (1999), economic responsibility is the basic responsibility followed by legal, ethical and philanthropic responsibility. While, according to findings of this study, the philanthropic responsibility is the basic responsibility from the consumers’ point of view followed by ethical, legal and economic responsibility. The findings are also different from Safi’s and Ramay’s (2013) study in Pakistan which shows that consumers give most consideration to economic responsibility followed by the philanthropic one and at the same time Min et al. (2015) in Malaysia find that ethical responsibility is the first consideration for consumers followed by the philanthropic, legal and economic responsibilities. As shown in the third part of Table 1 that indicates the CSR activities the organization should be involved in, donations and safe products are the highest (rank 123 and 114) ,followed by protecting environment, maximizing shareholder value, taking part in community work and use natural resources without waste, which all rank closely between (86and76). These activities followed by sponsoring education that scored 48 counts, while the least rank was for sport sponsoring that scored only 21 counts. The findings on CSR activities seem to be on the same track with the findings of CSR definition, where the majority of respondents indicated that it is essential for organizations to contribute to charitable activities in order to be socially responsible.

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5.1 CSR and Consumer Behavior Multi-linear regression (MLR) analysis is a method used to draw a linear relationship between some independent variables and a dependent variable. Table 2 shows regression analysis outcomes that indicate the relation of economic, legal, ethical, and philanthropic responsibility (independent variables) on consumer purchasing behavior (dependent variable). The values of multi-correlation coefficients (R) can lie between -1 and +1. According to the model summary of multi regressions in Table 2, the multiple R is 0.116, this means that there is a positive linear relationship between CSR elements and consumer behavior. As can be seen in Table 2, R-square is equal to 0.013, which is less than 1. This indicates that there is a very weak linear relationship between CSR elements and consumer behavior. Approximately 1.3% of the variance in all the CSR elements can explain consumer behavior. The findings show that there are many other factors that affect consumer behavior in addition to CSR elements, as for example, price, quality, promotions, ……etc.

Table 2: Model Summary

Model Summary

Model

R R Square

Adjusted R Square

Std. Error of the

Estimate

1 .116a .013 .017 .49992 a. Predictors: (Constant), Ethical, Legal, Philanthropic, Economic

The analysis of variance (ANOVA) in Table 3is used to test whether there is a significant or insignificant linear relationship between the four elements of CSR and consumer behavior. According to Table 3, the p-value is 0.777 which means that the four CSR elements are insignificant to consumer behavior.

Table 3: ANOVA of multiple regression

ANOVAa

Model Sum of Squares

df Mean Square

F Sig.

1 Regression .443 4 .111 .444 .777b

Residual 32.490 130 .250 a. Dependent Variable: Consumer Behavior b. Predictors: (Constant), Ethical, Legal, Philanthropic, Economic

The coefficient table is one of the important tables that could be used to explain the relationship between CSR and consumer behavior and to test the hypothesis.

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Table 4: Coefficient of multiple regressions

Model Unstandardized Coefficients

Standardized Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 1.606 .498 3.222 .002

Economic -.022 .029 -.072 -.755 .452

Legal .041 .065 .059 .635 .526

Philanthropic -.007 .072 -.009 -.097 .923

Ethical -.055 .048 -.103 -1.145 .254 a. Dependent Variable: Consumer Behavior Toward CSR

Therefore, the multiple regression equations of this study is: Consumer Behavior = 1.606 – 0.022 Economic Responsibility + 0.041 Legal Responsibility – 0.007 Philanthropic Responsibility –0.055 Ethical Responsibility. As can be seen in Table 4 based on significance (Sig.) column, the p-value for each CSR element is greater than 0.05 which means that all CSR elements do not contribute to explaining the variance of the dependent variable (consumer behavior) so the hypothesis is not supported. In contradiction with Nochai and Nochai (2014) study in Bangkok that indicates a significant relationship between consumer buying behavior and legal and ethical responsibilities. Min et al. (2005) in Malaysia indicate a significant relationship between consumer buying behavior and ethical and philanthropic responsibilities. The multiple regression equations represents that when consumer behavior (dependent variable) changes by 1 unit, the economic, philanthropic, and ethical responsibility will change negatively with (0.022, 0.007, and 0.055, respectively) while legal responsibility will change with 0.041 in the same direction of consumer behavior.

6. Conclusion This study aims to investigate the awareness of Egyptian consumers of CSR and whether they are taking into consideration CSR activities when they are taking buying decisions or not. Findings indicate that it is a good understanding of CSR in the Egyptian society that is similar to Kolkailah et al. (2012). Findings also indicate that Egyptian consumers seem to view CSR differently from other countries. Philanthropic responsibility is the basic element of CSR from the Egyptian consumer point of view which is contradictory with Carroll’s pyramid, Safi and Ramay (2013) and Min et al. (2015). As shown in the results, all CSR elements have insignificant relation to consumer behavior. Moreover, this study differs from Rahim et al. (2011) and Safi and Ramay (2013), who indicate that CSR has a significant impact on consumer response, while Nochai and Nochai (2014) indicate that philanthropic and economic responsibilities have insignificant relation with consumer buying behavior. Moreover, this study finds that there is an insignificant relation between consumer buying behavior and CSR elements, which means that Egyptian consumers do not think about any of the CSR elements when they take their buying decision. Due to the low level of income Egyptians do not consider elements of CSR, but they only consider prices concerning purchasing decisions.

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This study has some limitations such as that it was conducted only in Alexandria. In addition, sample size might limit the external validity of the findings, which may be extended for a larger sample in future researches to improve the validity of findings. This study explains the effect of CSR on consumer purchasing behavior without specifying any industry. So the researchers recommended that this type of studies be applied to industries which are related to consumer purchasing decisions.

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